[New York Stock Market] "Tariffs Are for Negotiation" Despite US-China Trade War Concerns, Stocks Rise Together... Caution Also Prevails

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The three major indices of the U.S. New York Stock Exchange all closed higher on the 4th (local time). Despite concerns over the rekindling of the second U.S.-China trade war, investors continued to buy stocks, viewing President Donald Trump's tariff measures as a 'negotiation tool.' Technology stocks led the gains.

On that day in the New York stock market, the Dow Jones Industrial Average (Dow) focused on blue-chip stocks closed at 44,556.04, up 134.13 points (0.3%) from the previous trading day. The S&P 500, centered on large-cap stocks, rose 43.31 points (0.72%) to 6,037.88, and the Nasdaq, focused on technology stocks, jumped 262.06 points (1.35%) to close at 19,654.02.

Investors paid close attention to the U.S.-China tariff war. According to an executive order signed by President Trump on the 1st, starting at midnight on the 4th, an additional 10% tariff was imposed on all imports from China on top of existing tariffs. China immediately retaliated by imposing 15% tariffs on U.S. coal and liquefied natural gas (LNG), and 10% tariffs on crude oil, agricultural machinery, and automobiles. However, President Trump indicated he would speak again with Chinese President Xi Jinping, leaving room for negotiation.

The market views President Trump's tariff measures as negotiation leverage. The day before, Trump secured promises from Canada and Mexico to strengthen border enforcement to address drug and illegal immigration issues, delaying the imposition of a 25% universal tariff by one month. This has led to optimism among investors that the tariff bomb may not become a reality.

Jay Hatfield, CEO of Infrastructure Capital Advisors, said, "Investors are too negative about tariffs," adding, "These are political tariffs, not economic tariffs, so they won't last long." He continued, "Although no agreement has been reached, it will likely end with tariffs of around 5-10% on most imports, which is a tolerable level."

On the other hand, some analysts warn that investors are underestimating President Trump's determination to impose tariffs.

Andrei Tueni, Head of Trading at Saxo Bank France, said, "The tariff issue will not disappear as quickly as expected," adding, "While earnings provide some momentum, there is a bigger game at play, and we are only at the beginning, so buying should be approached cautiously."

Investors also focused on employment data released that morning. According to the U.S. Department of Labor's Job Openings and Labor Turnover Survey (JOLTs), job openings in December last year fell by 556,000 from the previous month (8.156 million) to 7.6 million. This is the lowest level in three months since September last year and significantly below market expectations (8.01 million). This is interpreted as a sign that the labor market is gradually slowing down.

Stuart Paul, an economist at Bloomberg Economics, said, "The overall decline in job openings somewhat exaggerates the cooling speed of the labor market," adding, "However, labor market demand is expected to remain on a somewhat shallow cooling trajectory over the next few months."

A more accurate picture of the U.S. labor market will be available in the January employment report from the U.S. Department of Labor on the 7th. Experts expect nonfarm payrolls to have increased by 154,000 last month, a significant decrease from the previous month's 256,000. The unemployment rate is expected to have remained steady at 4.1%.

By individual stocks, Palantir, a U.S.-based AI-driven data analytics software company, surged 23.99%. The stock attracted buying after issuing earnings guidance that exceeded expectations the previous day. Nvidia rose 1.71%, while Apple and Microsoft (MS) increased by 2.1% and 0.35%, respectively. Alphabet, Google's parent company, which released earnings after the market close, rose 2.5% during regular trading. Alphabet reported fourth-quarter revenue of $96.47 billion and earnings per share (EPS) of $2.15, slightly missing the earnings estimates compiled by LSEG ($96.56 billion and $2.13, respectively). Alphabet was down 6.65% in after-hours trading as of 4:33 p.m. Eastern Time.

As the market remained largely unfazed by President Trump's tariff policies, the safe-haven U.S. dollar declined. The dollar index, which measures the value of the U.S. dollar against six major currencies, fell 0.95% from the previous trading day to 107.84.

Government bond yields declined. The U.S. 10-year Treasury yield, a global bond yield benchmark, dropped 2 basis points (1 bp = 0.01 percentage points) to 4.51%, while the 2-year Treasury yield, sensitive to monetary policy, fell 4 basis points to 4.21%.

International oil prices closed mixed amid concerns over the U.S.-China tariff war and the resumption of President Trump's "maximum pressure" campaign against Iran. West Texas Intermediate (WTI) crude fell $0.46 (0.63%) to $72.7 per barrel, while Brent crude, the global oil price benchmark, rose $0.24 (0.32%) to $76.2 per barrel.